October 20, 2018

KNOWING YOUR ALLIES:

[I]ran faces the threat of being blacklisted by the Financial Action Task Force (FATF), an intergovernmental organization tasked with combating financial crimes including money laundering and terrorism. To avoid blacklisting, Iran must carry out nine actions. The watchdog body said on October 19 that Iran had until February to complete reforms that would bring it into line with global norms or face consequences that could completely isolate Tehran from the international banking system.

To meet the nine FATF requirements, the Rouhani administration introduced four bills in parliament. Two bills--authorizing Iran to join the Combating the Financing of Terrorism (CFT) Convention and the UN Convention against Transnational Organized Crime (the Palermo Convention)--sparked a fierce battle between hardliners and centrists. Combining resistance to financial transparency and to the "imperial West," the deep state, dominated by hardliners, is strongly opposed to acceding to the FATF requirements.

However, Iran must satisfy these requirements to survive the coming sanctions avalanche. By doing so, it will make it easier to solidify European Union support in confronting Trump's punitive policy of "maximum pressure" toward Tehran. The EU is reportedly setting up a special purpose vehicle (SPV) to allow Iran to trade with European companies and bypass the US financial system.

On June 20, Khamenei fiercely attacked the bills that authorized joining the two conventions. "These conventions are cooked up in the think tanks of the great powers securing their interests and for the sake of their benefits," he remarked. Many thought that the hardliners had won the battle.

But in an unexpected reversal on September 10, Falahatpisheh announced that Khamenei had authorized the "administration and the parliament" to decide about dealing with FATF. Khamenei turned his back on conservatives, his social base, and gave the green light to the moderates to resolve the issue.

Iran's parliament, led by speaker Ali Larijani, whose views are closer to Rouhani than to the hardliners, pushed for ratification of the bill on joining the CFT convention during a contentious closed session on October 7. At the session, lawmakers voted 143 in favor of and 120 against; five abstained. The Guardian Council, a supervisory body led by the ultra-conservative Ayatollah Ahmad Jannati, who cannot even pronounce FATF, has yet to approve the bill. However, Khamenei's silence in this matter suggests that the Council will eventually approve it.

It was in this context that Falahatpisheh spoke of engaging Americans who oppose the Trump administration's harsh line on Iran.

Even Iran's Islamic Revolutionary Guard Corps (IRGC), which for two years attacked the idea of submitting to FATF requirements, has changed its approach. The latest issue of the IRGC weekly political organ, Sobhe Sadegh, features an interview with Mehdi Pazouki, an economist who supports joining FATF. In the interview, he describes the risks of rejecting the organization's recommendations.